The Travelers
Film Producers Package provides essential insurance solutions for
feature films, commercials, documentaries and television programs.
Protection extends beyond the property associated with these
productions. It also insures extra expenses arising from illness or
injury to cast members, loss or damage to negative film or videotape, or
problems arising from faulty cameras, film or processing.

Long recognized for delivering superior service, Travelers Insurance
Group and
Allen Financial Insurance Group support policyholders through its global
network of loss control and claim professionals. Our loss control
specialists have a deep knowledge of the entertainment business. They
identify potential hazards and help mitigate or prevent losses. They can
provide invaluable advice in fire prevention, disaster recovery
planning, equipment maintenance and premises safety.
The AFIG Entertainment & Media Division provides entertainment
insurance coverage on a worldwide basis for Motion Pictures, Videos, Television
and D.I.C.E. productions.

The Insurance
Information Network of California (IINC), describes four basic
film insurance products. They are designed to "protect filmmakers
from possible business interruption from everything from weather-related
filming delays to the loss of a cast member or other film personnel."

In a bulletin issued last year it
described them as follows:

Cast insurance covers any
additional costs that can arise if a production loses a cast member,
director or any personnel and often represent the largest film
insurance claims. Cast insurance is a form of "key man" life,
coupled with business interruption protection. In March of
1994, the producers of "Wagons East" collected $14.5 million when
actor John Candy died of heart failure with 20 percent of production
remaining.

Errors and Omissions policies
protect production companies from lawsuits involving violation of
personal rights, libel or slander. These policies usually require
filmmakers to consult with attorneys prior to a film's release to
check for anything that might spur a lawsuit.

General production insurance
packages provide the standard insurance needed by any business, such
as worker's compensation, general liability and commercial auto
insurance. It also includes costs for delays and re-shooting due to
inclement weather, equipment failure and set damage.

Completion bonding guarantees
that a film will be finished. Without completion bonds, some of the
Academy-Award nominated independent films such as "Cider House
Rules, "The English Patient" and "Leaving Las Vegas" might never
have made it to Oscar night. Without the backing of a major studio,
independent producers need the guarantee that they have the
financial means to complete a film.

Cast Insurance provides
coverage for additional expenses to complete principal photography
or in the event of necessary abandonment or aborted costs. This
could result if an insured actress, actor, animal or other declared
person cannot begin, continue or complete their duties in a
production as a result of death, injury or sickness. Insured persons
are initially covered for accident only, until such time as they are
medically examined and complete a medical questionnaire. The
carrier then will expand upon the coverage to include illness, if
the person qualifies, based upon the medical examination and
questionnaire. Coverage is also extended to include kidnapping of
any insured artist or director.

Cast insurance normally begins
four weeks prior to the first camera day; however, additional time
can be purchased in the form of Extended Pre-Production Cast
Coverage.

This
coverage provides special accident coverage
required by various Union and Guild contracts. Coverage is blanket,
and the limits of liability meet all signatory requirements.
Coverage may also be extended to non-union employees up to a benefit
limit of $50,000 each.

Covers all risks of
physical loss or damage to the negative film and indemnifies the
Production Company for the extra expenses incurred in re-shooting
the lost or damaged material, or for the aborted costs in the case
of abandonment. This coverage basically covers "external"
damage to the film and specifically excludes loss from faulty
materials, cameras, processing, etc. These exposures are insured under the
Faulty Stock section and therefore the two lines of coverage are commonly
purchased together to provide complete protection. There is commonly
no deductible for Negative / Videotape coverage.

The Faulty Stock coverage
is usually excluded from the Negative / Videotape coverage and added back as a separate
endorsement. The Faulty Stock endorsement provides
coverage for loss or damage caused by the following:

Fogging, or the use
of faulty materials.

Faulty cameras or
videotape recorders.

Faulty sound
equipment or soundtracks.

Faulty developing,
editing, or processing.

Accidental exposure
to light

Faulty cutting, editing,
cueing or other laboratory work; or accidental erasure of videotape
recordings or soundtracks,

Faulty Coverage indemnifies the Production Company for the extra
expenses incurred in re-shooting or repairing the lost or damaged
material, or for the aborted costs in the case of abandonment. There
is commonly a large deductible for Faulty Coverage.

This is
an "all risk," "worldwide," Inland Marine Floater that covers owned
property and the property of others while used or to be used in
connection with the insured activities for direct physical loss.

Miscellaneous Equipment

An Equipment "Floater"
refers to the fact that the coverage for the equipment "floats" and
is not restricted to one location. Coverage is provided on a
"Limited Worldwide" basis as there are several excluded countries.The
equipment covered by this floater may include Camera, Sound, Grip,
Electrical lighting, Communications and Musical Instrument
Equipment, Production Location Equipment (fixed and mobile),
Recording Equipment, Theatrical Property, Recreational Area
Equipment and all related property.

This is
a "worldwide" Inland Marine Floater that covers owned property and
the property of others while used or to be used in connection with
the insured activities. Coverage is provided for damage,
destruction or loss resulting from a "Covered Cause of Loss".
Covered Causes of Loss include, but are not limited to: Fire, Theft,
Vandalism, Breakage and Water Damage. Earthquake coverage is
generally excluded in a standard quote but coverage is available.
Exclusions include: wear and tear, electrical surge, mechanical
breakdown, confiscation by the government, dishonest acts, damage
caused intentionally, damage while being repaired, earthquake, flood
and mysterious disappearance. Theft from an Unattended Automobile is
covered but there must be "visible signs of forcible entry".
All covered losses (except Windstorm, Theft from a Locked Vehicle &
ANY covered loss outside of the United States) are typically subject
to a deductible of $1,000 or higher. Coverage is provided for the
cost to repair or replace equipment with new equipment. If the
equipment is not replaced it will be covered at Actual Cash Value

Reimburses the Production Company for any
extra expenses (additional costs) necessary to complete principal
photography due to the loss of, damage to, or destruction of property or
facilities (props, sets, wardrobe or equipment) used in connection with
the production. Coverage includes losses due to faulty generator
operation and mechanical breakdown of cameras.

Film
producers need this protection for their liabilities to others
arising out of their operations. This contract protects them for
their liabilities for unintentional bodily injury and property
damage. It provides coverage for claims
of bodily injury and/or property damage arising out of the filming
of a picture. This coverage is required prior to filming on city
and state roads or on any location sites requiring permits or
certificates. Bodily Injury to Cast and Crew members is not covered here
and should be covered by a Workers Compensation policy. This policy
also excludes property damage to property involved with the
production, automobile liability, large watercraft liability, &
aircraft liability. These exposures can be insured with specific
policies.

Rental Houses
commonly request a "Certificate of Insurance" providing proof that
they are named as Additional Insured on the the Production Company's
General Liability policy. Locations, studios, and landlords
will also usually request a "Certificate" naming them as Additional
Insured, as they are concerned about Property Damage that you might
do while on their property.

Care, Custody
& Control Exclusion:

All Commercial General
Liability policies contain an exclusion for property damage to
property in the insured's care custody and control. The policy
states " This insurance does not apply to: (h) property damage to
(3) property in the care, custody or control of the insured or
property as to which the insured is for any purpose exercising
physical control". This exclusion was designed to exclude coverage
for damage to property that should be covered under insurance
specifically designed for property, such as equipment
floaters, bailee insurance, fire insurance and so on.

Property Damage Liability Insurance covers loss, damage to, or
destruction of property of others, including loss of use of that
property in your care, custody or control. Coverage does not apply to
liability for damage to property caused by operation of any motor
vehicle, aircraft or watercraft, including damage to the foregoing; or
liability for damage to any property rented or leased that may be
covered under props, sets, or wardrobe; or miscellaneous equipment
insurance. This coverage is not included under a Comprehensive General
Liability Policy. Property Damage Liability Insurance written as part
of a comprehensive general liability policy excludes damage to any
property in the production company's care, custody or control.

Television and film
productions need errors and omissions insurance for a variety of
risks. The title of a production could violate a third-party
trademark, or an accidental failure to obtain consent or a proper
license could spark a lawsuit. Defense costs associated with such
lawsuits can be staggering. This coverage is usually a pre-requisite
for film distribution.

This is
a vital coverage to protect producers against copyright infringement
suits that may be brought against them.Errors & Omissions Insurance provides
coverage for:

Libel, slander or other
forms of defamation.

Invasion or the right of
privacy or publicity.

Unauthorized use of
names, trade names, service marks, titles, formats, ideas,
characters, character names, characterizations, plots, musical
compositions, performances, slogans, program material or any
similar material.

Infringement of
copyright.

Breach of implied or
implied-in-fact contract arising out of the alleged submission
of any literary, dramatic, musical or other similar material, or
breach of trust and confidence arising out of any such
submissions.

Worldwide coverage

Seven weeks before
Steven Spielberg's Amistad was to make its 1997 debut, a
lawsuit threatened to sink the movie's release. Barbara Chase-Riboud,
author of the novel Echo of Lions, brought the suit,
alleging that Dreamworks, Inc. had copied original "scenes,
characters and plot devices" in Amistad from her novel.
(Read Article)

The following items are
normally required to underwrite a film project:

Completed
application

Resume or
list of previous production works and credits

Videotape -
VHS format Videotape or DVD of the program to be insured

Title
Clearance Report - unless this is submitted and approved, the
policy will NOT include coverage for the title

Distribution
or broadcast contract - If coverage can be limited to a specific
contract or broadcast, the premium will be less than taking a
worldwide, any type of distribution policy

This
coverage protects the film producer for their liabilities arising
out of use of automobiles in their business. Physical damage to
"hired vehicles" can also be insured. If the production company owns
any automobiles, they must be specifically listed on the policy.

Provides
coverage for extra expense incurred by the interruption, delay or
abandonment of the production due to adverse weather conditions at the
location which reasonably and necessarily prevent filming or taping from
taking place.

This is
a broad category of coverage that is customized for the needs of the
film producer. Generally, this is coverage that is put in place to
protect the producer from losses due to circumstances beyond the
producer's control. It can be written for protection from many
causes, and is most often written to protect against adverse weather
conditions that will prevent filming.

This
form of insurance may not be around much longer. It is a fairly new
coverage that offers a bank some protection if the production does
not make enough money in distribution to repay a loan. The insurance
(bonding) company requires a lot of information including
distribution contracts. Once they are comfortable that the movie
will make a profit, they will guarantee partial repayment of the
bank loan. There have been several lawsuits concerning
misrepresentations from the producer and the insurance companies
refused to pay any losses.

A motion picture completion
guaranty is a written contract that guarantees a motion picture will
be finished and delivered on schedule and within budget. The
majority of films produced and fully financed by the major Hollywood
studios are, in effect, self-guaranteed. However, most independently
financed films, including many that are released and distributed by
the major studios, require a completion guaranty.

A producer usually secures a
completion guaranty for the benefit of the bank or other financiers
who agree to make the necessary production funding strike price
available to the producer. In general, a completion guaranty assures
banks and financiers that:

The producers will
complete and deliver the film in keeping with the screenplay,
budget and production schedule that the bank or financiers
approved; or

The completion guarantor
will complete and deliver the film in keeping with such
pre-approved screenplay and production schedule, and advance
such sums in excess of the pre-approved budget necessary to do
so; or

In the event production
of the film is abandoned, the completion guarantor will fully
repay all sums invested in the film by the bank or financiers.

The “strike price,” or the
“production price” as it is sometimes referred, is the amount that
the completion guarantor believes will be needed in order to
complete and deliver the film. The strike price will generally
comprise (1) the budgeted “above the line” and “below the line”
production costs, including fringes and insurance costs; (2)
interest and financing costs, if applicable; (3) the completion
guarantor’s fee; and (4) the contingency allowance. For the
completion guaranty to be effective, the full amount of the strike
price must be made available for production of the film.

The first proceeds from
distribution will go to pay off any loss of the bonding company.

This coverage is required by
state law, and applies to all temporary or permanent cast production
crew or office "employees". This policy provides coverage for
medical, disability or death benefits to any cast, crew or office
"employee" who becomes ill or who is injured in the course of
his/her employment.

Individuals who consider
themselves "independent contractors" or "sub-contractors" will
usually be held to be employees (as far as Worker's Compensation is
concerned), and failure to carry this insurance can result in having
to pay any benefits required under the law, plus substantial
penalties.

On location, coverage is
generally held to apply on a 24-hour basis, while "employees" are
away from their homes. Many production companies utilize the service
of a payroll service or PEO, as the employment organization can not only
perform the duties of payment of crew and talent (including the
payment of any payroll taxes, royalties and residuals), but they
also provide Worker's Compensation Insurance since these individuals
are technically "employees" of the payroll company itself.